@Risk

How much are operational inefficiencies costing your business?

A new survey from Accenture and Clearstream found that the financial services sector could save more than €4 billion (about $5.5 billion) annually in collateral management costs by addressing operational inefficiencies.

Clearly, collateral management has become a critical industry issue because 1) regulators have set more rigorous capital and liquidity standards, and 2) banks are confronting new cost and growth challenges in the wake of the global financial crisis.  Done right, however, efficient collateral management can free up liquidity for banks, enabling them to meet new regulatory requirements while offering more products and services.

According to the Accenture survey, banks’ key collateral management challenges include:

• An incomplete view of all collateral and an inability to manage holdings centrally
• Suboptimal internal governance leading to a misalignment of objectives
• Inadequate internal transfer-pricing mechanisms
• A lack of optimization engines or the ability to deploy them effectively
• Inability to perform inventory projections
• Excessive staff costs as a result of process complexity

The highest potential cost savings, according to survey respondents, can be achieved by: (more…)

Accenture recently polled 1,000 chief financial officers (CFOs) and chief marketing officers (CMOs) and found that most are “holding the reins tightly” when it comes to price competitiveness and increasing costs.

The vast majority (85 percent) of those who participated in the study said they do anticipate growth. But they also reported that continued economic uncertainty is forcing a more disciplined approach, one that focuses on cost management and the prudent use of cash.

For example:

• Nearly 90 percent of survey participants said price competitiveness is a primary strategic issue and that they expect to continue to maintain or cut costs and build cash positions further.

• Nearly three out of four CMOs surveyed (71 percent) said pricing is now among their companies’ top three strategic priorities. More than two thirds (71 percent) of the combined group of CMOs and CFOs believe they will have to maintain pricing, or even drop prices, given the current economic environment.

• Virtually all are eyeing additional cost-cutting. Continued pricing pressure, combined with persistent uneasiness among executives about the prospects sustainable global economic growth led 99 percent of survey participants to indicate that their companies would be pursuing some additional level of cost-cutting.

• 70 percent of respondents indicated that their companies have optimal-to-excess cash positions relative to current business demands, and nearly 90 percent have teams in place (some permanent, some temporary) focused on continuing to improve working capital productivity.  Roughly one third of the CFO participants indicated the need to continue generating cash to allow for opportunistic investments, increased R&D and/or future operational necessities.

Coupled with this disciplined approach to cost management, the study found that the CFOs and CMOs polled expect major impacts to their growth to result from improved product value, innovation and promotion across their businesses. (more…)

Corporate risk management has moved up the corporate agenda and is now considered a key to competitive advantage, according to a new report by Accenture.

Among the 397 executives participating in the 2011 study, 80 percent said that the increasing volatility and complexity of the economic and financial environment have elevated the importance of risk management as a key management function. In addition:

• 85 percent reported that risk has become a driver of competitive advantage for their company.

• Nearly half (49 percent) believe that corporate risk management will enhance the likelihood of long-term profitable growth for their company. About the same number (48 percent) said it will support sustainable future profitability.

Unfortunately, though, companies remain unprepared for today’s risky business environment –despite considerable investment in risk management capabilities.

More than half (52 percent) of the survey respondents said their individual company has invested $25 million or more since 2009 to improve risk management capabilities, and one in 10 said their company’s investment has exceeded $250 million. But, a whopping 83 percent said additional investments would be made in risk management in the next two years as their companies navigate market volatility, manage increased complexity and address a proliferation of risks, including: (more…)

Yesterday, Accenture released its 2009 Global Risk Management Study, and the results, to be frank, are sobering. The economic crisis has hit hard, and the vast majority of companies in the survey (85%) say they need to overhaul their approach to risk management. In the past, there has been little effort to align risk management with core business strategies, or to integrate risk management with operations and performance. Now, though, it appears that organizations are waking up to the benefits of investing in enhanced, integrated risk management capabilities.

(more…)